Source: Warhammer Fantasy: 5th Edition

Character's Leadership
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If a unit of troops includes a character it may use the character's Leadership value for any Leadership-based tests it takes. Where a unit includes several characters use the highest Leadership amongst them. This is a very important rule, as it provides units of poor troops with the leadership they need. This is especially true of Goblins, which are all but useless without a proper character to lead them. Leadership is important because it is used for psychology tests, Rally tests, and also for Break tests in combat.

The exception to this rule concerns units that are skirmishing. Skirmishing units do not benefit from the leadership of a character who is with them, their formation is too dispersed and it is therefore impossible to communicate the character's orders from man to man (see Skirmishers).

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